Fueled by the $26 billion Indian gaming industry, the country’s most famous restaurant franchises are moving to tribal lands like never before. Subway, Burger King, Sonic, Arby’s—you name ‘em.
Franchise lawyers need to appreciate that lawyering a franchise deal in Indian Country is akin to doing so in a foreign country. A form franchise agreement is likely a square peg, in tribal reservation deals. To illustrate:
Do federal franchise laws apply to the reservation franchisor? Probably. See Federal Power Comm’n v. Tuscarora Indian Nation, 362 U.S. 99, 116 (1960).
Do they apply to a tribal franchisee? Probably not. Cf. Multimedia Games, Inc. v. WLGC Acquisition Corp., 214 F. Supp. 2d 1131, 1131 (N.D. Okla. 2001).
Do state franchise laws apply to either party? Nope. Worcester v. Georgia, 31 U.S. 515, 559 (1832).
Do tribal laws apply to the franchisor? Yep. See e.g. Water Wheel Camp Recreational Area, Inc. v. LaRance, 642 F.3d 802 (9th Cir. 2011).
Does the United States need to approve the franchise agreement? Maybe. See 25 U.S.C. § 81.
Can the tribe tax the franchisor vis-à-vis its on-reservation activities? Yep. Washington v. Confederated Tribes of the Colville Indian Reservation, 447 U.S. 134 (1980).
Can the state? Maybe. White Mountain Apache Tribe v. Bracker, 448 U.S. 136 (1980).
The list of unique federal Indian and tribal legal issues goes on and on. In all, franchisor beware—especially franchise counsel.
Gabriel “Gabe” Galanda is the Managing Partner at Galanda Broadman. He is a citizen of the Round Valley Indian Tribes. Gabe can be reached at 206.300.7801 or gabe@galandabroadman.com.
